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Nov 14, 2017

Shareholder dividends v real investment: RBA picks a winner

Are shareholders and ticket clippers a weight on effective investment in the economy? The Reserve Bank seems to think so.


One of the tenets of contemporary capitalism is that when it comes to capital, companies can’t be trusted — that shareholders know better, especially when it comes to handling and investing the cash that companies generate. Shareholders should be continually rewarded through dividends and share buybacks — it’s called capital management and the mere mention of the phrase in a company’s statements (a special dividend or capital return) can send the shares higher, while a noted reluctance to engage in the process can send shares sharply lower in a matter of hours.

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3 thoughts on “Shareholder dividends v real investment: RBA picks a winner

  1. Graeski

    Yep. I reckon this idea has less chance of getting off the ground than a lead balloon.

  2. Amark

    Plenty of examples of companies wasting billions of dollars that would have been better off in shareholders hands


    Buybacks are wonderful for senior management. They drive up share prices and trigger huge performance bonuses. Investment in the business can be left to the next management.